In this case, the family’s youngest son—currently 6 years old—would, on turning 12, receive an inheritance of slightly more than $250 million. Not many families would hand over a quarter billion dollars to somebody that young. A stress test found that two numbers were transposed: The will should have read that the son would inherit the fortune at age 21.
Beyond that, how many families would entrust $250 million even to a 21-year-old, when that person is only 6 today? Some extremely wealthy families might, but this family was appalled by the idea. Evidently, there was a serious breakdown in communication between the family and the advisors.
After the stress test, the family’s wealth planning was dramatically adjusted and updated. At the moment, it is currently tightly aligned with the family’s agenda. It delivers the framework and structure for creating a dynasty, all the while insulating family members from losing wealth through taxes and litigation.
Stress testing is appropriate for most any client, regardless of wealth. But it’s important to focus on the human element, as opposed to focusing exclusively on the technical aspects.
The Winners
Financial advisors who can build optimal professional relationships with clients are likely to be the ones excelling in this fast-changing advisory world. This is not to say that the highest levels of technical expertise are not important. They are. But technological advancements will level the playing field for your competitors, making the entire gamut of financial services and products available to them.
What does this mean for the financial services industry? The answer is simple: There will be fewer advisors. But those that last will garner greater success.
Such professionals will have the knowledge, skills and insight to use financial solutions to effectively address the concerns and anxieties, the hopes and dreams of their clients. These financial advisors are the ones putting the human element front and center. For the results they produce—results that truly matter to their clients—they will be compensated quite well. In fact, even with a reduction in the fees commonly charged today, these advisors will be more profitable than ever before.
Russ Alan Prince is president of R.A. Prince & Associates.